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Law Society of Scotland Response Law Society of Scotland Response United Kingdom Internal Market Bill Second Reading Briefing September 2020 Introduction The Law Society of Scotland is the professional body for over 12,000 Scottish solicitors. With our overarching objective of leading legal excellence, we strive to excel and to be a world-class professional body, understanding and serving the needs of our members and the public. We set and uphold standards to ensure the provision of excellent legal services and ensure the public can have confidence in Scotland’s solicitor profession. We have a statutory duty to work in the public interest, a duty which we are strongly committed to achieving through our work to promote a strong, varied and effective solicitor profession working in the interests of the public and protecting and promoting the rule of law. We seek to influence the creation of a fairer and more just society through our active engagement with the Scottish and United Kingdom Governments, Parliaments, wider stakeholders and our membership. Our Constitutional Law and Obligations Law Sub-Committees, Trade Policy and Post-Brexit Working Parties (the Committees) welcome the opportunity to consider and respond to the United Kingdom Internal Market Bill at Second Reading and in respect of Committee Stage. The Committees have the following comments to put forward for consideration. General Comments Preliminary Comment Recently the bill has attracted considerable attention because of clauses 40-45 in respect of those provisions which will be inconsistent or incompatible with international or other domestic law. The bill should, as a matter of principle, comply with public international law and the rule of international law, pacta sunt servanda (agreements are to be kept) should be honoured. Adherence to the rule of law underpins our democracy and our society. We believe that to knowingly break with the UK’s reputation for following public international law could have far-reaching economic, legal and political consequences and should not be taken lightly. The Government should reflect on the terms of these clauses and their effect as the bill passes through Parliament. 2 PART 1 UK MARKET ACCESS: GOODS Introductory 1. Purpose of Part 1 Our Comment Part 1, if passed will create the UK market access principles of mutual recognition (MRP) and non- discrimination (NDP). Clauses 2-14 provide further detail on these principles and their application to the free movement of goods within the United Kingdom. In this respect the clauses approximate to but importantly differ in a number of respects from rules of EU law found in articles 34-36 of the Treaty on the Functioning of the European Union (TFEU) (which prohibit quantitative restrictions on imports and exports between Member States), Regulation 2019/515 on the mutual recognition of goods lawfully marketed in another Member State and decisions of the European Court of Justice (CJEU). Accordingly a) the impact on devolved competences will not be the same and b) in some cases it is difficult to work out what its impact might be. Furthermore, aspects of the bill where it impacts on the legislative or executive competences will engage the Legislative Consent Convention and in relation to the Scottish Parliament and Scottish Ministers Section 28(8) of the Scotland Act 1998 which recognises ‘that the Parliament of the United Kingdom will not normally legislate with regard to devolved matters without the consent of the Scottish Parliament’ will apply. Mutual recognition: goods 2. The mutual recognition principle for goods Our Comment We refer to our comments in relation to clause 1. Clause 2 applies the MRP to goods which have been produced in or imported into one part of the UK and comply with any relevant statutory requirements so they can be lawfully sold in that part can then be sold in any other part of the UK without compliance with any statutory requirements which apply in that other part. 3. Relevant requirements for the purposes of section 2 3 Clause 3 defines “relevant requirement” for the purposes of the MRP as it applies to the sale of goods in the UK. It also includes a prohibition on the sale of goods. These requirements, if complied with in the part of the UK where the goods were produced or imported into, do not then need to be complied with when they are sold in another part of the UK. Clause 3(7) empowers the Secretary of State to amend (by adding to varying or removing any aspect of) clause 3(4) which provides detail about statutory requirements in the scope of MRP. Clause 3 (4) includes statutory requirements regarding the characteristics of the goods, their presentation, production, identification or tracing, inspection and registration, documentation and any other requirements not otherwise referred to. Our Comment This is a very wide power and regulations are subject to affirmative resolution procedure. The Secretary of State must consult the devolved administrations before making such regulations. We are concerned at the level of Parliamentary scrutiny applicable to clause 3 regulations. Changing the scope of the mutual recognition principle may have significant consequences and we believe that the appropriate procedure should be super affirmative resolution procedure which enables longer consultation and for the views of stakeholders to be taken into account. The obligation on the Secretary of State to consult with the devolved administrations is welcome but the clause lacks a) detail about the timescale for consultation and b) any obligation on the Secretary of State to report the outcome of the consultation with reasons for the decision. The Government should make clear what the consequences will be if a Devolved Administration does not agree with the outcome of the consultation. 4. Exclusion of certain requirements existing on the relevant day Clause 4 excludes existing requirements from the scope of the MRP in areas where different regulatory requirements exist in different parts of the UK before clause 4 comes into force. Our Comment This provides a significant degree of clarity and certainty about the law and how the bill will affect the sale of goods across the UK. Future changes to existing statutory requirements (other than re-enactment without substantive change) will be subject to the MRP. We note that “substantive” is not defined in clause 4. The Government should explain what it interprets as “substantive change” during the bill’s passage. Clause 4 does however mean that certain regulatory divergences which currently exist and will continue to be able to be enforced against goods produced in, or imported into, other parts of the UK would not be able 4 to be so enforced were they to have been introduced after the MRP comes into force. The Government should explain why divergent regulations are or are not problematic in terms of the operation of the internal market simply because of the date at which they are introduced. Non-discrimination: goods 5. The non-discrimination principle for goods Clause 5 makes provision for the NDP, that the sale of goods in one part of the UK should not be affected by directly or indirectly discriminatory relevant requirements due to a relevant connection that the goods have with another part of the UK. This reflects aspects of CJEU jurisprudence and identifies parts of the UK as “originating” or “destination” according to their relationship to “incoming goods”. Clause 5(3) makes clear that a relevant (statutory) requirement (see clause 6) is of no effect if it directly or indirectly discriminates against incoming goods. Our Comment It would appear that the effect of clause 5(3) will be to render a statutory provision in devolved legislation of “no effect” but to make this clear there should be an amendment to this effect to section 29 of the Scotland Act 1998. It is also not clear what is the effect, if any, of clause 5(3) if the statutory provision is in an Act of Parliament. It is suggested that these matters should be clarified. We take the view these statutory provisions could be challenged by private parties. It will presumably also be a basis for challenging devolved legislation (assuming the inability to modify the bill under clause 49, will in all cases prohibit legislation that is contrary to its principles – presumably that is the intention but it is not the clearest way that outcome could have been achieved). However, what is the effect of clause 5(3) in relation to an Act of Parliament? The Government should state how a statutory requirement contained in an Act of Parliament under clause 6 is affected by this subsection. 6. Relevant requirements for the purposes of the non-discrimination principle Clause 6 defines “relevant requirement” for the purposes of the NDP. Clause 6(5) empowers the Secretary of State to amend (by adding to varying or removing any aspect of) clause 6(3) which provides detail about statutory provisions in the scope of NDP. Clause 6(3) includes statutory provisions regarding the circumstances of the sale of goods, their transportation storage etc., inspection and registration etc., and conduct or regulation of businesses that engage in the sale of certain goods. Our Comment 5 This is a very wide power and regulations are subject to affirmative resolution procedure. The Secretary of State must consult the devolved administrations before making such regulations. We are concerned at the level of Parliamentary scrutiny applicable to clause 6 regulations. Changing the scope of the mutual recognition principle may have significant consequences and we believe that the appropriate procedure should be super affirmative resolution procedure which enables longer consultation and for the views of stakeholders to be considered. The obligation on the Secretary of State to consult with the devolved administrations is welcome but the clause lacks a) detail about the timescale for consultation and b) any obligation on the Secretary of State to report the outcome of the consultation with reasons for the decision.
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